Question 1

What are sources of equity ownership in a business?  Are these sources cash resources?

Accepted Answer

The two sources of equity are: 
1.  Inve

Question 2

Bettina plans to draw an income from her new business but her personal living expenses are not needed in the financial plan unless these expenses are part of the capitalization of the business.

Accepted Answer

A) True 
 B)False

Question 3

Even though Miriam projected an annual positive cash flow, she may run out of cash if:

Accepted Answer

A)  customers use debit cards for their purchases. 
B)  her sales are seasonal. 
C)  sales exceed her projections. 
D)  she finds a less expensive supplier. 
A)  customers use debit cards for their purchases. 
B)  her sales are seasonal. 
C)  sales exceed her projections. 
D)  she finds a less expensive supplier.

Question 4

Mario has high hopes for his new business, anticipating a very large profit margin.  For the preparation of his forecasts, he should use industry averages regardless of his hopes.

Accepted Answer

A) True 
 B)False

Question 5

Many small firms have a tendency to underestimate the amount of capital the business requires when beginning operations.

Accepted Answer

A) True 
 B)False

Question 6

Marcia like to use other people's money when financing her business.  In this way she "does more with less" by controlling resources without actually owning them.

Accepted Answer

A) True 
 B)False

Question 7

Natasha has been in business for a little over a year with her Sips and Munchies Coffee Shop where she sells an array of coffees and pastries.  She rents a building with a downtown location and manages the business and employees herself. Discuss factors that drive the company's profits.

Accepted Answer

- Amount of sales : Natasha should consi

Question 8

To project pro forma financial statements, speaking to others in the industry and researching industry averages are good starting points.

Accepted Answer

A) True 
 B)False

Question 9

Tony operates a computer retail business. Based on the industry, how often should sales projections be for the company in projecting sales?

Accepted Answer

A)  monthly for Year 1; annual for Years 2 and 3 
B)  annual for Year 1; quarterly for Years 2 and 3 
C)  monthly for Year 1; quarterly for Years 2 and 3 
D)  annual for Year 1, monthly for Years 2 and 3 
A)  monthly for Year 1; annual for Years 2 and 3 
B)  annual for Year 1; quarterly for Years 2 and 3 
C)  monthly for Year 1; quarterly for Years 2 and 3 
D)  annual for Year 1, monthly for Years 2 and 3

Question 10

D&R Products forecast a first year asset requirement of $143,500; therefore, the total debt requirement is

Accepted Answer

A)  $143,500. 
B)  a set percentage of sales. 
C)  equal to the current ratio. 
D)  dependent on the owner's equity amount. 
A)  $143,500. 
B)  a set percentage of sales. 
C)  equal to the current ratio. 
D)  dependent on the owner's equity amount.

Question 11

Mark wants to make sure he does not run out of cash so he is preparing a monthly cash budget.  After determining the percentage of cash collections by month, he should

Accepted Answer

A)  estimate the amount and timing of cash disbursements. 
B)  calculate cash flow from operations. 
C)  determine the end-of-month cash balance. 
D)  determine beginning-of-the-month cash balance. 
A)  estimate the amount and timing of cash disbursements. 
B)  calculate cash flow from operations. 
C)  determine the end-of-month cash balance. 
D)  determine beginning-of-the-month cash balance.

Question 12

An entrepreneur should always project at least two scenarios for financial forecasting and budgeting: best case and worst case

Accepted Answer

A) True 
 B)False

Question 13

As her accounts payable and accrued expenses rose along with her firm's sales, Ariel noticed that  ________ occurs.

Accepted Answer

A)  spontaneous debt financing 
B)  trade credit financing 
C)  escalating debt 
D)  asset-based financing 
A)  spontaneous debt financing 
B)  trade credit financing 
C)  escalating debt 
D)  asset-based financing

Question 14

Because Liam's new restaurant had a high volume of sales, his inventory needs increased illustrating that a firm's asset needs are the primary force driving sales.

Accepted Answer

A) True 
 B)False

Question 15

A golf club should break down its annual cash budget into shorter time units because

Accepted Answer

A)  of the seasonality of its sales. 
B)  one year is too far into the future to predict. 
C)  the marketing plans may change during the year. 
D)  production breakdowns may alter the company's situation. 
A)  of the seasonality of its sales. 
B)  one year is too far into the future to predict. 
C)  the marketing plans may change during the year. 
D)  production breakdowns may alter the company's situation.

Question 16

Cash flow can be projected in two ways: using the income statement to project cash flows or preparing a cash budget.

Accepted Answer

A) True 
 B)False

Question 17

No single planning document is more important in the life of a company than the

Accepted Answer

A)  income statement. 
B)  cash budget. 
C)  balance sheet. 
D)  corporate charter. 
A)  income statement. 
B)  cash budget. 
C)  balance sheet. 
D)  corporate charter.

Question 18

Maria is projecting sales for her company for the upcoming new year. To be financially effective, she

Accepted Answer

A)  can over-project for sales if she has done research. 
B)  should develop realistic sales projections. 
C)  would be better served by under-projecting sales so she won't be disappointed. 
D)  ignore projections until after 1 year of operations when she can realistic project. 
A)  can over-project for sales if she has done research. 
B)  should develop realistic sales projections. 
C)  would be better served by under-projecting sales so she won't be disappointed. 
D)  ignore projections until after 1 year of operations when she can realistic project.

Question 19

The cash budget is concerned only with dollars received and dollars paid out.

Accepted Answer

A) True 
 B)False

Question 20

Marcia uses other people's money whenever possible to finance her business.  She prefers to minimize and control rather than maximize and own.  This practice is known as:

Accepted Answer

A)  high-stepping. 
B)  bootstrapping. 
C)  unethical business practice. 
D)  taking advantage of others. 
A)  high-stepping. 
B)  bootstrapping. 
C)  unethical business practice. 
D)  taking advantage of others.

Exam 11: Forecasting Financial Requirements

What are sources of equity ownership in a business? Are these sources cash resources?

Bettina plans to draw an income from her new business but her personal living expenses are not needed in the financial plan unless these expenses are part of the capitalization of the business.

Even though Miriam projected an annual positive cash flow, she may run out of cash if:

Mario has high hopes for his new business, anticipating a very large profit margin. For the preparation of his forecasts, he should use industry averages regardless of his hopes.

Many small firms have a tendency to underestimate the amount of capital the business requires when beginning operations.

Marcia like to use other people's money when financing her business. In this way she "does more with less" by controlling resources without actually owning them.

Natasha has been in business for a little over a year with her Sips and Munchies Coffee Shop where she sells an array of coffees and pastries. She rents a building with a downtown location and manages the business and employees herself. Discuss factors that drive the company's profits.

To project pro forma financial statements, speaking to others in the industry and researching industry averages are good starting points.

Tony operates a computer retail business. Based on the industry, how often should sales projections be for the company in projecting sales?

D&R Products forecast a first year asset requirement of $143,500; therefore, the total debt requirement is

Mark wants to make sure he does not run out of cash so he is preparing a monthly cash budget. After determining the percentage of cash collections by month, he should

An entrepreneur should always project at least two scenarios for financial forecasting and budgeting: best case and worst case

As her accounts payable and accrued expenses rose along with her firm's sales, Ariel noticed that ________ occurs.

Because Liam's new restaurant had a high volume of sales, his inventory needs increased illustrating that a firm's asset needs are the primary force driving sales.

A golf club should break down its annual cash budget into shorter time units because

Cash flow can be projected in two ways: using the income statement to project cash flows or preparing a cash budget.

No single planning document is more important in the life of a company than the

Maria is projecting sales for her company for the upcoming new year. To be financially effective, she

The cash budget is concerned only with dollars received and dollars paid out.

Marcia uses other people's money whenever possible to finance her business. She prefers to minimize and control rather than maximize and own. This practice is known as:

The Entrepreneurial Life

Integrity Ethics and Social Entrepreneurship

Starting a Small Business

Franchises and Buyouts

The Family Business

The Business Plan Visualizing the Dream

The Marketing Plan

The Organizational Plan Teams Legal Structures Alliances and Directors

The Location Plan

Understanding a Firm S Financial Statements

A Firm S Sources of Financing

Planning for the Harvest

Building Customer Relationships

Product Development and Supply Chain Management

Pricing and Credit Decisions

Promotional Planning

Global Opportunities for Small Business

Professional Management and the Small Business

Managing Human Resources

Managing Small Business Operations

Managing the Firm S Assets

Managing Risk

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